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In this episode, we discuss the ongoing 2023 negotiations between the United Auto Workers Union and Caterpillar, the global leader in heavy machinery manufacturing. We discuss their strike authorization vote, strike contingency planning, the strike labor landscape, strike security, and more.
What you will learn:
➡️ Overview of the Caterpillar and UAW Central Labor Agreement
➡️ The steps each side is taking to prepare for a work stoppage
➡️ Other notable union negotiations happening in 2023
Caterpillar & UAW Central Labor Agreement
To set the stage for you -- back in 2021 10,000 UAW members went on strike against John Deere for about a month securing 10% raises and improved benefits for their membership. Michele talks about this strike in a previous episode called “Strike while the iron is hot – what’s happening in Labor Relations”, with Peter List, a Labor Relations consultant and the podcast host of Labor Relations Radio. This past weekend, a strike involving 1000 UAW members at CNH Industrial, another multinational equipment manufacturer, came to an end after nearly 9 months at their Burlington, IA, and Racine, Wisconsin plants. Details of the contract had not been disclosed at the time of recording, but Michele points out that the end of this labor dispute is a positive development for Caterpillar from a strike labor availability perspective.
According to Caterpillar’s negotiation schedule listed on their website, they planned to present initial contract proposals in early 2023, to discuss core issues and potential solutions, continue negotiations into February, and hopefully have a tentative agreement by the end of the month. Assuming the contract is voted in, work would continue as normal. If rejected and the UAW calls a strike, Caterpillar will implement their contingency plans. Just as the company is preparing for a potential work stoppage, the union is preparing its membership. Just a couple of weeks ago, the UAW sent a letter to their membership preparing members for a possible strike, notifying them of a strike authorization vote scheduled for January 27th, and letting them know they will be distributing red t-shirts to its members that say "Will strike if provoked". For those not familiar with this process, a strike authorization vote does not mean that a strike will happen, but if passed, would give the union the ability to do so. It's a very common step for the union to take and doesn’t necessarily indicate that a strike is likely. In this case, the fact that the UAW went on strike against John Deere for a month and went on strike at CNH for 9 months would be a cause for concern. Just as the union is preparing for a potential strike, the company is preparing contingency plans to run its business in the event of a work stoppage because they have an obligation to its dealers, customers, and employees to run its facilities in the event of a labor dispute.
Strike Replacement Worker Availablity
One of the challenges that Caterpillar faces from a contingency planning perspective is the tight labor market and the availability of replacement workers to supplement the internal employees they plan to use on the plant floor. In this case, Caterpillar just got lucky because the UAW members who were on strike against CNH Industrial just approved a new contract. There were already a number of replacement workers on-site at CNH with similar skilled trades and production workers that Caterpillar would need if they had a strike at their plants too which would have made it a little more difficult to source strike replacement workers with those skill sets. Now that the situation has changed, and those replacement workers will be headed home soon, it technically does free up some potential talent with recent experience manufacturing similar industrial equipment. That being said, there is now a window between them leaving CNH and when they might be needed to deploy to Caterpillar, and that window could present a challenge. The challenge is whether or not they get deployed to a different project before they’re needed at Caterpillar.
Something that is worth mentioning – the pandemic and the corresponding shift in the labor market have increased demand for traveling skilled trades and production workers unrelated to labor disputes which are MADI's focus now since pausing all strike-related services. So you have an industry that was almost entirely focused on strike staffing pre-pandemic, and now, there is increased demand for contract staffing projects unrelated to labor disputes so there are more projects for contract workers to choose from. In other words, those who are willing to travel away from home for months at a time with manufacturing experience have more options. Rather than deciding on which strike project to choose, they now have strike projects or many different contract projects which means they can choose a job for an unknown duration that requires crossing a picket line every day, or, they can choose a contract project where the duration is known and there is no hostile picket line. Contractors are being offered projects anywhere from 2 to 6 months or even a year or longer in some cases. So the industry is changing and is more competitive than it was before the pandemic. This change combined with a tight labor market makes the sourcing of strike replacement workers more challenging for agencies that continue to provide this service.
Combating Labor Challenges With a Contingency Plan
The tight labor market will be a challenge for any company that has a contract renewal this year and plans to bring in replacement workers. If that's you, Michele highly recommends that you do not wait until you’re close to a potential strike to reach out to companies for help. While it’s always been in a company's best interest to begin contingency plans before negotiations begin, in this labor market and with the increased demand for traveling manufacturing workforces, it’s more important than ever to reach out to agencies well in advance of a strike to begin those conversations.
According to Caterpillar’s website, they’re planning on bringing in staffing support to train for production roles. Bringing non-union employees into work on the production floor is common during strikes, especially for larger ones, but can create some potential safety risks since those individuals are not used to working in that type of environment day after day. The training employees receive beforehand will be important for safety and for making them feel more comfortable with the whole situation. Another concern would be whether or not putting non-union employees on the plant floor for a period of time may cause them to leave and increase turnover. This could pose a potential issue for younger employees and those who have not been with the company that long. Turnover is obviously a big issue for companies today, especially for manufacturers. Michele talks about cutting turnover in one of our other episodes Cutting turnover by 20% or more during the great resignation. Coincidentally, our guest Dick Finnegan, 'The Turnover Expert' talks about how he helped Caterpillar cut turnover by 47% at one of their plants. The other thing to consider is that although using non-union company employees can work well for the beginning of the strike, those employees have their own day jobs so they may not be able to stay on the production floor for the duration of the strike if it ends up continuing for weeks or months. Having internal employees step in can be great for critical positions, helping out at the onset of a strike, and to provide additional time for the strike staffing agency to source more personnel for the project, but it’s usually not a permanent solution for longer labor disputes.
Picket Line Safety
Having to cross a picket line to get to work every day can create anxiety for employees. If it gets to that point, Caterpillar should have a plan in place to transport non-union employees in and out of the plants so they don’t have to drive their own cars, and so they can cut down on the number of vehicles coming in and out of the plant each day. That’s important because each time a vehicle enters or exists during a labor dispute it creates a potential risk – a risk to the vehicle being damaged, a risk to the picketers, and a risk to those in the vehicles.
Strike security officers are armed with video cameras and trained to know what types of incidents they can and cannot record on the picket line. You want those types of events properly documented so you have evidence against any false accusations and certainly for any actual incidents that occur on the picket line. At the John Deere strike in 2021, a picketer was stuck and killed by a car while walking to the picket line which is why proper planning to mitigate the risks inherent in a strike is critical as is having the right security team on-site.
Other Notable Negotiations Happening in 2023
The Big 3 Auto contracts
Covering 150,000 auto workers at Ford, General Motors, and Stellantis (formerly Chrysler), their contracts expire on September 14th. Among the issues in negotiations will be two-tier wages and benefits, cost of living adjustments, and job security as the industry shifts to electric vehicle production. Back in 2019, 48,000 UAW members went out on strike against General Motors impacting around 50 plants in the U.S.
The aluminum producer has a master agreement running through May 15th with the United Steelworkers Union that covers 1600 production and maintenance workers across 5 facilities.
The Erie, PA location has a contract expiring on June 9th with the United Electrical Workers Union covering 1400 locomotive manufacturing workers, and in 2019 employees went on strike for 9 days.
Their contract is due to expire on June 18th with the International Union of Electrical Workers covering 3,000 workers across several manufacturing plants. Back in February of 2022, union members from across the country rallied at the company’s headquarters in Boston demanding the company invest more in its U.S. plants.
UPS has a contract with the Teamsters
Covering 340,000 drivers and warehouse workers, the contract expires on July 31st. What’s notable about their upcoming negotiations is that the Teamsters International Union has a new president, Sean O’Brien who was the previous Teamster President for Local 25 in Boston. He’s promised that the union will be ready for the first strike against UPS since 1997.
There will be a lot of big negotiations this year worth keeping an eye on – and Michele regularly shares news and posts about these topics on LinkedIn, so feel free to send her an invitation to connect or follow her there! A follow-up episode may be in the future as Michele plans to bring on MADI's Director of Security to talk about strike security and strike security planning. If that topic is of interest to you or you have another topic idea for the show, we’d love to hear from you. Send us an email any time at email@example.com.
2023 Central Labor Agreement: https://www.caterpillar.com/en/company/global-footprint/negotiations/cla.html
Podcast Episode: Strike while the Iron is hot – what’s Happening in Labor Relations
Podcast Episode: Cutting turnover by 20% or more during the great resignation
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